Claim Scenarios for Non-Environmental Contractors

An HVAC contractor installed a new ventilation system as part of the renovation of a 25 story office building. An electrical fire broke out in the building’s basement two years after the renovation was complete. As the fire burned, ventilation shafts pumped PCBs and dioxins throughout the building. The contractor was later held liable for a large portion of the more than $40 million cleanup costs, since ventilation shaft openings were found to be too close to transformer equipment.

A residential contractor renovated the interior of a residential house built in the 1950s. The renovation involved paint removal from interior walls, window trim and door jambs. During the course of renovation, the contractor used a plastic barrier to seal the areas where he was working. The homeowners continued to occupy the house during renovations. Additionally, the wife was six months pregnant. Renovation was finished prior to the birth of the baby; however, upon birth, the child tested positive for blood lead poisoning. After investigating the source of the lead, the couple sued the contractor for bodily injury as well as potential loss of future wage potential (due to a possible decreased IQ level for the baby) in the amount of $500,000.

A mechanical contractor removed lead based paint from a commercial building. The contractor isolated the work areas with containment, but the HVAC system was not disconnected. Dust generated from lead removal operations clogged the heating coils in the building’s HVAC system. The contractor was liable for replacing the HVAC system, as well as business interruption claims totaling $150,000.

A Carpentry contractor installed new carpeting in an office building. One week after the installation, the owner of the office building informed the contractor that employees were complaining of headaches and dizziness. The contractor could not prove that the manufacturers of the carpet or the carpet adhesive were responsible. The contractor filed a claim with their general liability carrier. The claim was denied because the contractor brought the hazardous materials, such as formaldehyde and volatile organic compounds, onto the site.

A Roofing contractor installed a new roof at a 250,000 square foot office building and shopping center. The roofing material decomposed and caused a chemical reaction, emitting fumes into an office building. The contractor faced a $400,000 property damage and loss of use claim.

A mechanical contractor removed ductwork from a hospital’s HVAC system. It was later determined that the ductwork was home to a dangerous fungus. The dismantling activities and the on-site storage of dismantled ductwork caused the fungus to spread into the hospital. Patients became infected with the fungus; some were even critically infected. The contractor was found liable for the spread to the fungus and faced bodily injury and property damage claims in excess of $1 million.

A street/road contractor was subcontracted to pave a parking lot for a new commercial structure. At the end of the day, the tack coat was sprayed onto the sub-base prior to paving. During the evening, a major thunderstorm caused the tack coat to wash off and flow into a nearby stream. The general contractor was responsible for cleanup costs, which exceeded $200,000. To recoup these costs, the general contractor withheld the subcontractor’s payment. In turn, the subcontractor filed a claim with its insurance company to recover lost revenue. The insurance company denied reimbursement based on the absolute pollution exclusion under the general liability policy.

A residential contractor developed a subdivision. Small sinkholes began to appear in the development, soon giving up all kinds of debris. Residents feared that the debris could extend underneath some of the homes. Homeowners filed a lawsuit against the contractor/developer. Because the contractor could not identify the owner of the debris, they were forced to clean it up at a cost exceeding $1 million.

A subcontractor working for a street/road contractor performed abrasive sandblasting on a bridge. The bridge was located near a residential area. Lead paint chips and dust from the sandblasting became airborne and migrated onto residential properties, requiring cleanup. The residents filed property damage claims against the street/road contractor for the dust generated by the subcontractor. The claims totaled $400,000.

These claims examples have been provided to us by our insurance companies over the years. These represent actual environmental claims they have seen. While the coverages we offer are designed to address these general issues, we make no guarantee or warranty that any individual policy we offer will respond to all issues as described herein. Please refer to the actual policy wording in each offered form to determine coverage applicability and acceptability.

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